News from HITN, Post to HFN

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By Andrew Watson
04:09 AM
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Despite digital health's record breaking VC growth last year – and more recent reports showing it hasn't slowed down in 2015 either – the percentage of these startups that actually make it might surprise you.

According to new research conducted by Accenture, in fact, more than half of all digital health startups are likely to fail within two years following their launch. Not the most encouraging outlook for those those fledgling companies that raked in a record $4.1 billion for 2014.

But as Accenture officials point out, there's huge opportunity and value for prospective buyers in what they're calling the "zombie" startups.

[See also: Despite slowdown fears, digital health VC keeps pace.]

"Rather than discard the investment that has been made in getting sputtering start-ups off the ground, it often makes sense for healthcare stakeholders to acquire them, salvage their best people and technologies and awaken them from a zombie-like existence," said Kaveh Safavi, managing director for Accenture's global healthcare business, in an Aug. 13 statement detailing report findings.

"Many digital start-ups that are dying or in danger of failure have developed solutions that can help traditional and non-traditional healthcare companies achieve their goals," he added.

Those digital health startups at risk for failing could benefit potential corporate buyers, according to Accenture. Why? Three big reasons.

First, they represent an opportunity to bring on top technical talent with serious innovation capabilities. This "acqui-hiring" is already a common practice at Silicon Valley companies such as Google and Apple, researchers point out. 

[See also: 2014 venture cash: Digital health nails it.]

Second: "Greater innovation," according to Accenture. Acquiring one of these startups means securing intellectual property and patents. In fact, its researchers found a potential 1,700 patents across the 900 startups it analyzed in the report.

And the last big reason? The opportunity to build on and expand current platforms and technologies of the buying company.

But if there's serious value in healthcare mergers and acquisitions, how many startups are actually being purchased? Digital health seed fund Rock Health tracked 95 merger and acquisition deals in 2014, totaling to more than $20 billion in disclosed transactions.

How do the fail rates for digital health startups stack up against other industries? Much of the data out there estimates that between 30 percent and 90 percent of all startups with fail, in fact. So healthcare is ahead of the game against others. 

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Contrary to a spate of recent surveys and studies that show rising physician aggravation with EHR systems, another new poll shows majorities of large practices commending "enhancements in functionality, service and innovation" of leading vendors.

More than two-thirds of physician practices with more than 25 clinicians surveyed by Black Book Rankings – multispecialty clinics, IPAs, large group practices – applauded the usability of their EHRs in the second quarter of  2015.  

Black Book surveyed the clients of EHR vendors with the highest scores in customer experience in the areas of document management, productivity, practice administration, reporting, interoperability, order entry and decision support.

[See also: Ambulatory IT shows 'adverse impacts on workflow']

It found an uptick in physician experience across the large practice and clinic sector, compared with results since it first began measuring EHR satisfaction.

Back in 2013, for instance, a whopping 92 percent of multispecialty groups using EHRs were "very dissatisfied" with the ability of their systems to improve clinical workload, documentation and user functionalities.

This year, however, 71 percent of large practice clinicians said their optimization expectations of "top ranked" vendors were being met or exceeded.

Those high-scoring vendors focused on the large group practices: Allscripts, Greenway, McKesson and athenahealth.

Black Book shows huge recent leaps in satisfaction among the more than 1,300 large practices surveyed.

Ratings for physician experience satisfaction jumped from 8 percent in 2013 to 31 percent in 2014 – and to 67 percent in 2015.


For the same time periods, appreciation for physician documentation improvements increased from from 10 percent to 28 percent to 63 percent. Scores for practice productivity enhancements leapt from 7 percent to 17 percent to 68 percent.

[See also: Doctors like EHRs even less than they did five years ago]

One reason might be that consumers have become much more discerning, and are making smarter choices about better products.

"Meaningful use deadlines, total integration and reliable delivery may have influenced large group practice buyers to purchase initial EHRs from 2010 through 2013, but replacement buyers sought better EHR tools in 2014 that include patient engagement, true interoperability, enhanced usability and productivity gains," said Doug Brown, managing partner of Black Book, in a press statement.

"There was also a measureable shift in loyalty to vendors that offered a robust, core EHR to accommodate evolving reforms," he added.

Based on the aggregate client experience and customer satisfaction scores on 18 key performance indicators, Allscripts was the top scorer across all surveyed EHRs for large practice categories of 26-99 physicians, and 100-plus physicians, according to Black Book.

This is the second consecutive year Allscripts has achieved the top ranking for 100-plus physician groups including independent practice associations, multispecialty clinics, academic practices, and large group clinics.

Allscripts also ranked in the top spot for 26-99 physician group satisfaction for the first time, according to Black Book – surpassing Epic, eClinicalworks and QSI NextGen, which have occupied the top spots in recent years.

Other findings from the survey:

  • Clinics and large practices implementing an original EHR prior to Q4 2012 were the most dissatisfied (71 percent) with their EHR vendor's performance in 2015.
  • 62 percent of primary care and medical specialists in large group practices report a return to normal levels of productivity after rolling out their EHR systems.
  • 53 percent of surgical specialists in large group practices reported productivity enhancements over 2014.
  • 18 percent of those large practices and clinics surveyed by Black Book are in the discussion or execution stages of replacing their original EHR by the end of 2016.

"EHR firms with a wide offering of products including health information exchange, population health tools, revenue cycle management services, patient portals, dashboards and analytics are emerging as the next wave of healthcare technology leaders," said Brown.

"These leading vendors are assisting their clients in assessing current practice operations to meet the demands of ICD-10, payment reform, connectivity beyond closed networks, revenue cycle management gaps, and population health tools, and recommending effective options within the same vendor suite," he said.

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